ConAgra Foods to Split into Two

ConAgra Foods, Inc. today announced plans to pursue the separation of the Company into two independent public companies: one comprising its robust consumer portfolio of diverse and leading brands and the other comprising its market leading foodservice portfolio of innovative frozen potato products. The consumer brands business will be renamed Conagra Brands, Inc. (“Conagra Brands”) and the frozen potato business will operate under the Lamb Weston name. Immediately following the transaction, which is expected to be completed in the fall of 2016, ConAgra Foods shareholders will own shares of both independent companies. The transaction is expected to be structured as a spin-off of the Lamb Weston business, tax-free to the Company and its shareholders.

“The decision to separate into two pure-play companies reflects our ongoing commitment to implementing bold changes in order to deliver sustainable growth and enhanced shareholder value,” said Sean Connolly, president and chief executive officer, ConAgra Foods. “We carefully considered a variety of strategic alternatives, and believe that the separation of our Lamb Weston specialty potato business from our consumer brands business is the best way to drive shareholder value. The separation will enable each company to sharpen its strategic focus and provide flexibility to capitalize on the unique growth opportunities in its respective market. Shareholders will gain direct exposure to more focused consumer and commercial foods businesses, each with distinct customer bases and investment profiles. We are confident that this separation will best position each company to compete and win while creating compelling long-term value for shareholders and delivering benefits to employees, customers and other key stakeholders.”

The two businesses operate in distinct markets and possess unique and compelling growth prospects and investment requirements. In addition, ConAgra Foods believes that the separation will result in other material benefits to the standalone companies, including:

Increased flexibility, agility and resources to capitalize on their respective long-term opportunities and growth strategies;

Tailored capital structures and financial policies and targets appropriate for each company’s unique business profile; and

The ability for investors to value the two companies based on their particular operational and financial characteristics and invest accordingly.

Conagra Brands

Conagra Brands will be comprised primarily of the operations currently reported as the Company’s Consumer Foods segment, which generated approximately $7.2 billion in fiscal 2015 revenues, as reported. The Consumer Foods segment consists of popular leading brands such as Marie Callender’s, Hunt’s, RO*TEL, Reddi-wip, Slim Jim, PAM, Chef Boyardee, Orville Redenbacher’s, P.F. Chang’s and Healthy Choice.

Conagra Brands is also expected to include several businesses currently reported within the Commercial Foods segment, including the traditional foodservice business (sales of branded products to foodservice companies), Spicetec Flavors & Seasonings and JM Swank, as well as certain private label operations which were moved to the Consumer Foods reporting segment in the first quarter of fiscal 2016. These businesses generated approximately $1.8 billion in fiscal 2015 revenues, as reported. Conagra Brands is also expected to retain the Company’s stake in the Ardent Mills joint venture.

Conagra Brands’ core strategy will focus on further strengthening its consumer and foodservice portfolios, driving innovation and improving margins. Conagra Brands will remain committed to its plans to optimize operational efficiency to provide additional resources to invest in the business and pursue strategic acquisitions while also returning capital to shareholders. Conagra Brands expects to maintain an investment-grade profile following the separation, and to remain committed to a strong and attractive dividend.

Conagra Brands will be led by CEO Sean Connolly and will be headquartered in Chicago.

Lamb Weston

Following the separation, Lamb Weston’s portfolio will consist of frozen potato, sweet potato, appetizer and other vegetable products, as well as a continued presence in retail frozen products under licensed brands and private brands. For fiscal 2015, Lamb Weston generated revenues of approximately $2.9 billion, as reported, and accounted for the significant majority of the Commercial Foods segment’s fiscal 2015 operating profit of approximately $570 million.

Lamb Weston is a leading frozen potato products provider to the foodservice industry on a global basis. The Company’s interests in several joint ventures, including Lamb Weston / Meijer in Europe, are integral to the execution of its global strategy and are expected to remain with the business following separation. With distinct competitive advantages in key geographies, Lamb Weston will leverage this strong foundation to build upon its proven track record of growth. The Company will focus on opportunities to expand share domestically and accelerate international growth, particularly within fast-growing emerging markets.

Capital structure and capital allocation policy for Lamb Weston have not yet been finalized. The Lamb Weston management team will be announced at a later date.

Separation Details

The separation is expected to be tax-free to ConAgra Foods shareholders for federal income tax purposes. The transaction is currently targeted to be completed in the fall of 2016, subject to final approval by the Company’s Board of Directors, other customary approvals and receipt of an opinion from tax counsel on the tax-free nature of the spin-off to the Company and its shareholders. Throughout the separation process, ConAgra Foods management will remain highly focused on driving strong business performance, and delivering on its previously announced $300 million efficiency plan.

ConAgra Foods today also reiterated its plans to utilize the net proceeds from the pending sale of its Private Brands business primarily for debt reduction.

ConAgra Foods will hold investor days for Conagra Brands and Lamb Weston prior to the execution of the separation.

Goldman Sachs and Centerview Partners are serving as financial advisors and Jones Day and Davis Polk & Wardwell LLP are serving as legal advisors to ConAgra Foods.

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